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Kahtnu appeals surgery center denial

Kahtnu Ventures has appealed the State of Alaska’s denial of its application for a Certificate of Need to build an ambulatory surgical center in Kenai.

In a May 3 letter, Kahtnu through its lawyers, requested a hearing to appeal the April 4 decision by William Streur, State Department of Health and Social Services Commissioner.

Kahtnu alleges in the request, “CON staff appears to have purposefully distorted much of the information to be considered in order to arrive at an outcome-determined result.”

State staff recommended Streur deny the application in late February because “the applicant did not clearly outline the cost and size of the project, did not define a service area and failed to show need for additional surgical capacity,” according to state documents.

Kahtnu disputes those claims in its appeal.

“We’ll see,” said James Zirul, one of Kahtnu’s members, when asked if he was optimistic about the appeal. “I’m going to stay absolutely neutral on it.”

Kahtnu proposed building the $9 million, 8,365-square-foot ambulatory surgery in Kenai in hopes of performing 1,800 outpatient surgeries per year with a group of eight local surgeons headed by Zirul and Henry Krull.

The state declared Kahtnu’s application complete in late December 2011 and several public meetings were hosted to discuss the matter.

Kahtnu said the center would provide health care consumers with a choice that also would lower the cost of outpatient surgeries and prevent medical out-migration to Anchorage.

Central Peninsula Hospital officials fought the surgery center idea, alleging it would rob the hospital of the more profitable service lines it offers, thus damaging its less profitable areas and the hospital overall. CPH currently does 1,700 outpatient surgeries with its three operating rooms.

CPH officials said losses could total $20 million from surgery charges from a total $150 million the hospital realizes in total charges among all services if the surgery center were built.

More than 800 letters of support were submitted to the state from all sources in regard to the application. About 200 letters were received in opposition to the project, including those from Central Peninsula Hospital, the city of Soldotna and the Kenai Peninsula Borough Assembly.

In regard to the state’s claim that Kahtnu did not clearly outline the cost and size of the project, Kahtnu said it “clearly stated the cost and size of the project and the CON staff’s ‘confusion’ on this issue is contrived.”

Kahtnu said the service area was defined by Kenai Peninsula Borough ordinances despite the state’s claims it was not.

In response to the state’s allegation Kahtnu failed to show need for additional surgical capacity, Kahtnu said it did prove the need.

“When one uses the correct service area and correct input data, the need for additional surgical capacity is established ...,” the appeal reads. Kahtnu also requested a waiver should the state find there was no need.

“Staff’s ‘analysis’ was also incomplete because it failed to even address Kahtnu’s request for a waiver should the staff conclude that their ‘need’ calculation did not demonstrate a ‘need,’” the appeal reads.

Kahtnu claims state staff “cherry-picked” responses and took them out of context in regard to the center’s total square footage, “appears to manufacture a claim” that Kahtnu used three different projected cost figures, tried to “mislead” the commissioner, and in another area claims the state’s confusion about where it will have a transfer agreement with is “another ruse.”

Kahtnu also took issue with the state’s consideration of the surgery center’s service area, which included most of the Peninsula. Kahtnu said the state should not have included the two surgery rooms at South Peninsula General Hospital in its proposed service area.

On Tuesday, the Kenai Peninsula Borough Assembly gave the thumbs up to a joint agreement with Kahtnu and Central Peninsula General Hospital Inc. to dismiss a lawsuit regarding CPH’s fourth operating room.

Kahtnu had taken issue with development and completion of CPH’s fourth operating room, specifically about whether CPH needed to obtain a CON for the project.

“We all agreed to drop it is what it came down to,” Zirul said.

CPH Chief Executive Officer Rick Davis said he wasn’t aware of the details of the appeal, but was disappointed to hear Kahtnu had taken the matter up again.

“I was hoping we could kind of get back to business and not have to keep on worrying about that,” Davis said. “We will just have to hear how it turns out.”